Bryan Micon's Butterfly Labs Scammer Investigation including Josh Zerlan

[CoinHoarder]

You do realise that if BFL is legit, you're going to look the biggest clown in the whole Bitcoin community for a very long time...
Especially with the video, scam accusations and constant tirade against BFL. You've made the whole BFL issue into Mircon vs BFL.

Either you'll come out smelling of roses or look a complete moron.

Yawn, people said the same thing about PirateAt40

is really stupid compare pirateat40 with BFL.

How so?

Pirate payed his investors monthly up until the day he defaulted to gain trust from the community and get more people to invest more money.

How is that any different from BFL selling FPGAs to gain the trust of the community and getting more people to invest more money in ASICs up until the day they run off with all the pre-order money?

The cases are similar if that's really what's going on here. Anyone that denies BFL's shadiness stands too much to lose if it turns out to be a scam and are blindly defending BFL. I have no ASIC pre-orders and can see things from an unbiased viewpoint. There is a possible chance BFL pre-orders are a scam, to say there is no chance would be foolish.

[1714061015]

1714061015

[1714061015]

1714061015

[1714061015]

1714061015

[1714061015]

1714061015

[SgtSpike]

You do realise that if BFL is legit, you're going to look the biggest clown in the whole Bitcoin community for a very long time...
Especially with the video, scam accusations and constant tirade against BFL. You've made the whole BFL issue into Mircon vs BFL.

Either you'll come out smelling of roses or look a complete moron.

Yawn, people said the same thing about PirateAt40

is really stupid compare pirateat40 with BFL.

How so?

Pirate payed his investors monthly up until the day he defaulted to gain trust from the community and get more people to invest more money.

How is that any different from BFL selling FPGAs to gain the trust of the community and getting more people to invest more money in ASICs up until the day they run off with all the pre-order money?

The cases are similar if that's really what's going on here. Anyone that denies BFL's shadiness stands too much to lose if it turns out to be a scam and are blindly defending BFL. I have no ASIC pre-orders and can see things from an unbiased viewpoint. There is a possible chance BFL pre-orders are a scam, to say there is no chance would be foolish.

Because they've been losing trust (and preorders/money) since December.  They would've stopped the scam and ran then rather than lose money continuing with it.

[iCEBREAKER]

When there is no actual product and no prototypes accepting orders is an "investment" not a purchase. It is basically a no interest loan especially if they use the funds to finance their production process. In this case yes the SEC does prosecute investment scams, because thats what it is.

Exactly.  BFL appears to be crowdfunding without being straightforward about it, much less compliant with the numerous applicable regulations.

BFL is going to get reamed under the new JOBS Act.  The SEC says everything is forbidden until they get around to permitting it.   
    

Frequently Asked Questions About Crowdfunding Intermediaries

http://www.sec.gov/divisions/marketreg/tmjobsact-crowdfundingintermediariesfaq.htm

Responses to Frequently Asked Questions

Question 1.

I would like to operate a crowdfunding intermediary. Am I required to register with the SEC before doing so?

Answer:

Yes. You must register with the SEC either as a broker or as a funding portal.

Please keep in mind that the SEC still has to write rules to implement the crowdfunding provisions of the JOBS Act. Until the SEC has completed this rulemaking, you cannot act as a crowdfunding intermediary, even if you are already a registered broker.

This situation is unlikely to change anytime soon, because Obama and the Democrats are tools of Wall Street oligarchs:

Stalled Crowdfunding Rules Leave Business Plans on Ice
http://online.wsj.com/article/SB10001424127887324339204578173731988591450.html

SEC uses JOBS Act to set up new roadblocks to crowdfunding
http://venturebeat.com/2012/08/31/sec-uses-jobs-act-to-set-up-new-roadblocks-to-crowdfunding/

Crowdfunding, The 'Game-Changing' Part Of The Jobs Act, Is Stuck In Regulatory Hell
http://www.businessinsider.com/crowd-funding-is-stuck-in-regulatory-hell-2012-12

Crowdfunding Start-ups Wait in Wings as SEC Stalls
http://www.inc.com/eric-markowitz/crowdfunding-start-ups-wait-for-sec.html

[CoinHoarder]

Because they've been losing trust (and preorders/money) since December.  They would've stopped the scam and ran then rather than lose money continuing with it.

While its true they have lost trust throught the community, according to Inaba himself, hardly anyone has asked for a refund.

Also, how do you know they have not received a lot of orders in the past few months of uncertainty? Answer: you don't. I'm sure they had plenty more new orders in that time period... Not everyone reads these forums. Some rich guy whom just heard about bitcoin might come across some PR article BFL released about their ASICs or see their booth at CES and go straight to the website and buy 10 mini rigs... Etc.

[SgtSpike]

Because they've been losing trust (and preorders/money) since December.  They would've stopped the scam and ran then rather than lose money continuing with it.

While its true they have lost trust throught the community, according to Inaba himself, hardly anyone has asked for a refund.

Also, how do you know they have not received a lot of orders in the past few months of uncertainty? Answer: you don't. I'm sure they had plenty more new orders in that time period... Not everyone reads these forums. Some rich guy whom just heard about bitcoin might come across some PR article BFL released about their ASICs or see their booth at CES and go straight to the website and buy 10 mini rigs... Etc.

Ok, I agree, it is speculative on both sides of the coin.  I am basing my speculation on the fact that I have seen 3-4 times as many people posting about receiving refunds for their BFL orders vs new posts saying they have ordered some.  But again, that is not telling any story with certainty.

Where did Josh state that hardly anyone has asked for a refund?

[CoinHoarder]

Where did Josh state that hardly anyone has asked for a refund?

I think he said this in late December around christmas day in one of the million page BFL threads while arguing with the anti-BFL posse... Good luck finding it though. He even went so far as stating every time he argued with someone on bitcointalk.org or someone says bad things about BFL, the more that their sales increased.... Something along these lines. So judging by that alone, their sales should be higher than ever right now, lol! 

[creativex]

Yeah, I'm his numero uno sales guy!

[DoomDumas]

You do realise that if BFL is legit, you're going to look the biggest clown in the whole Bitcoin community for a very long time...
Especially with the video, scam accusations and constant tirade against BFL. You've made the whole BFL issue into Mircon vs BFL.

Either you'll come out smelling of roses or look a complete moron.

+1

Anyone firing at BFL without any proof, just speculating about this being a scam ...   Do you realize how damaging it could be for your name fi BFL asic became real ?
AFAIK, anyone calling BFL or any other Asic companies scam, are doing so just on speculation.. 

No working asic as been proven to exist, as no prove have been made of an Asic companie to be a scam..  About bAsic, I would say they have just fails, and never intended to scam (just my personal speculation/impression)

I dont understand why so many peoples are fighting against BFL !  Maybe because if they succeed, they will succeed A LOT and this make some jealous ?

If they fails, they have at least tried..  If it's a scam, I'll be really surprised !

weeks to come sounds really exiting !!!

[DoomDumas]

Micon - I'll gladly take you up on a 1:1 bet that BFL will deliver.  I'd put down 20 BTC that BFL will deliver an ASIC miner by the end of 2013.

Im in to bet this too

will you dare ?

[DoomDumas]

You do realise that if BFL is legit, you're going to look the biggest clown in the whole Bitcoin community for a very long time...

What if BFL is a scam? A scam worth 1/4 of the total bitcoin market cap? Wow... That may easily become the end of bitcoin?!

(facepalm)

First I'm sure the percentage of bitcoin payments is much lower than dollars payments.

Second by more than insist on hogging your bitcoin and thus your absurd logic that should give you back the same amount of btc though now worth twice as much, it really logical and likely is that all btc payments immediately converted to USD.

And...$25M is a number invented and absurdly large.

+1 won a place in my ingnore list for his absurd request/whinning.. complaining like a kid, crying loud everywhere.. Tired to read his nonsense claim, even doing a complaint to the SEC ??  Ignore function are for this kind of user !

Like CoinHoarder said :
There is a possible chance BFL pre-orders are a scam, to say there is no chance would be foolish.

I'm still willing to (have) bet on BFL delivering Asic somtimes in 2013 !

[lucif]

And if it is a scam, I will be a most vision prophet in Bitcoin community.

Va-Bank. I smell scam from 100 miles.

Va-Bank: in gambling is when player bets all of his money. Other players must also bet all their money or surrender. In common meaning means an action with a huge risk, huge profit or huge loose.

Go Va-Bank - bet all on single event.

In Ukrainian it sounds like "Aбo Пaн aбo пpoпaв" - "Either king or beggar".

[becoin]

I dont understand why so many peoples are fighting against BFL ! 

Really? It shouldn't be so difficult!
"Give us your money now and we shall deliver something whenever we have something to deliver"...
Well, you say this is not a scam?!

[becoin]

Other players must also bet all their money or surrender.

Both players are not in the same weight category. One of them has succeeded in collecting tenths of millions from greedy monkeys and can easily "Va-bank" every opposition now. He has nothing to lose except his customers' money. But hey... This is a risk his customers have accepted right?

[lucif]

I have big interest here you don't really see. And Josh helps me alot with his stupid behavior. As well as all BFL leaders and Bitpay.

[lucif]

One you look like a prophet, one you look like a clown.

Exactly man, exactly! I am prophet clown. I like to be on both sides of long stick. Hell and heaven. Destruction and construction.

"The only difference between the wise man and the fool is that the wise man knows he is playing" Fritz Perls

[becoin]

especially as we get closer to dispatch of ASICs.

Uh... Quite on the contrary. After the last announcement we are back to square 1!

BFL strategy is simple. They started as a scam, no doubt about that. In the middle of the distance of scam life cycle they tried hard to become gray but they failed several times. If they'll end as a scam depends entirely on how many customers will request refunds. That situation, my friend, is a classic ponzi scheme! The only difference is that they do not pay interest on the funds they've attracted from their creditors (pardon me, customers).

[AndyRossy]

I strongly disagree with Micon on many issues, and his approach, but this is one where I agree with him.

[becoin]

The Manual:
https://bitcointalk.org/index.php?topic=136615.0

[BitcoinINV]

BFL as of Dec was already in violation of a FTC rule, They did not send out the required options notices and everyone who did not get one should call the FTC and complain plain and simple. The FTC will fine them for everyone one of these Notices they did not comply with.

The website in the FAQ still had delivery date listed as NOV, they have since changed that since I posted a post Similar in another thread. That means as of DEC 2012 If you did not get a notice from BFL they broke the FTC rules.

Sample Fine
http://news.cnet.com/FTC-fines-e-tailers-1.5-million-for-shipping-delays/2100-1017_3-243684.html

I called this shit long ago... But I was trolling lol I contacted the Attorney General, but at the request of some members I did not pursue action. I think some of you need to pick up the phone and make a quick call it only takes about 5 mins.

Selling on the Internet: Prompt Delivery Rules
The Internet is the fastest growing source of mail order sales. It's estimated that consumers spent $200 billion on Internet-based goods and services in 2008. The explosive growth in the goods and services sold online has in the past, taken many online sellers by surprise: demand has outpaced supply, depleting inventories and disappointing customers. The Federal Trade Commission is advising online merchants to review their obligations under the Mail or Telephone Order Merchandise Rule to better serve their customers.

The Rule spells out the ground rules for making promises about shipments, notifying consumers about unexpected delays, and refunding consumers' money. Enforced by the FTC, the Mail or Telephone Order Rule applies to orders placed by phone, fax or the Internet. Your compliance can have bottom line benefits for your company - that is, satisfied customers are repeat customers.

Complying With The Rule

By law, you must have a reasonable basis for stating that a product can be shipped within a certain time. If your advertising doesn't clearly and prominently state the shipment period, you must have a reasonable basis for believing that you can ship within 30 days.

If you can't ship within the promised time (or within 30 days if you made no promise), you must notify the customer of the delay, provide a revised shipment date and explain his right to cancel and get a full and prompt refund.

For definite delays of up to 30 days, you may treat the customer's silence as agreeing to the delay. But for longer or indefinite delays - and second and subsequent delays - you must get the customer's written, electronic or verbal consent to the delay. If the customer doesn't give you his okay, you must promptly refund all the money the customer paid you without being asked by the customer.

Finally, you have the right to cancel orders that you can't fill in a timely manner, but you must promptly notify the customer of your decision and make a prompt refund.

Running Late? Overwhelmed with Orders?

The Rule gives you several ways to deal with an unexpected demand.

You can change your shipment promises up to the point the consumer places the order, if you reasonably believe that you can ship by the new date. The updated information overrides previous promises and reduces your need to send delay notices. Be sure to tell your customer the new shipment date before you take the order.
You must provide a delay option notice if you can't ship within the originally promised time. The Rule lets you use a variety of ways to provide the notice, including e-mail, fax or phone. It's a good idea to keep a record of what your notice states, when you provide it, and the customer's response.
Your Opportunity to Comment

The National Small Business Ombudsman and 10 Regional Fairness Boards collect comments from small businesses about federal compliance and enforcement activities. Each year, the Ombudsman evaluates the conduct of these activities and rates each agency’s responsiveness to small businesses. Small businesses can comment to the Ombudsman without fear of reprisal. To comment, call toll-free 1-888-REGFAIR (1-888-734-3247) or go to www.sba.gov/ombudsman.

For More Information

Contact the FTC’s Consumer Response Center for the complete Business Guide to the Mail or Telephone Order Merchandise Rule and Advertising and Marketing on the Internet: Rules of the Road.

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

[Micon]

When there is no actual product and no prototypes accepting orders is an "investment" not a purchase. It is basically a no interest loan especially if they use the funds to finance their production process. In this case yes the SEC does prosecute investment scams, because thats what it is.

Exactly.  BFL appears to be crowdfunding without being straightforward about it, much less compliant with the numerous applicable regulations.

https://forums.butterflylabs.com/bfl-forum-miscellaneous/690-13-jan-2013-asic-update-discussion-thread-5.html#post10399

Another delay we've had to endure is the fact that we have effectively tied the ASIC teams payment to the success of the chip. If the chip were to be a failure they don't get paid... so they have incentive to get it right but that has made them very cautious and slow to approve final masks (This is why we can refund all pre-orders we want and why we have the capital to do what we need to do without a failure putting us in bankruptcy).

Seems to me like BFL is using pre-order money to fund ongoing R&D & pay Josh Zerlan + other BFL employee salaries.  It seems like they have shot some of that pre-order $$$ at China and China has not shot back ASIC chips.  Who knows where the fail could be in such a complex machine. 

I wonder if they keep gambling:  maybe they send more of the pre-order money at a different Chinese manufacturer that promises that can produce the chips, all the while using the huge pre-order bankroll for operations and weekly salaries.

Apparently some of the funds are also used to buy CES booths with fan-boxes as a show of corporate strength, with instruction to cuss at anyone asking the tough questions: http://youtu.be/UlWrmIqGs3Y?t=2m38s